Do the feds have the right banks in their crosshairs?

With Tuesday’s headline in The New York Times blaring that “Two giant banks, seen as immune, become targets” of prosecutors, many readers no doubt assumed that at long last the government was about to bring criminal charges stemming from some of the worst frauds connected to the Great Recession, which cost investors and taxpayers hundreds of billions of dollars. No such luck. The story is that officials are eyeing the prosecution of a pair of European banks: Credit Suisse is accused of offering tax shelters to Americans, and BNP Paribas is being probed for its dealings with Sudan and other prohibited countries. One of the problems with such legal actions is that a criminal conviction could force a bank out of business, wreaking great economic harm.

Do the feds have the right banks in their crosshairs?

Yes. The European banks under scrutiny seem to have violated many laws. The offenses of other U.S. banks don’t rise to the level of criminality. Plus, the economic risks of prosecution are too high.

No. Six years after the crash, banks that defrauded investors, homeowners and government agencies in the boom years have been forced to pay huge fines but have not been charged with criminal conduct.